7 Portfolio Value Management

Question 1

Sense of Portfolio Value Management

Answer 1

ensure that investment in a portfolio delivers the required return as defined in the organizational strategy

Question 2

most important principles for portfolio value management (2)

Answer 2

• ensure that investments in portfolio components are alligned with the organization´s strategy
• balance Portfolio Value against overall risks

Question 3

Def value

Answer 3

an indicator of the effect an entity or offeing can deliver

Question 4

forms of value (2)

Answer 4

• tangible
• intangible

Question 5

def and examples for tangible value

Answer 5

can be directly measured: resource capacity, market share, client satisfaction, economical value

Question 6

def and examples for intangible value

Answer 6

cannot be directly measured: brand awareness, reputation, risk exposure,…

Question 7

key activities to effectively manage value (5)

Answer 7

• negotiate expected value
• maximize return
• realize value
• measure performance
• report value

Question 8

what is negotiated with whom under “negotiate expected value”?

Answer 8

Portfolio Manager negotiates the expected portfolio value vs. the required portfolio value including risk appetite of the organization and expectations with component owners and the strategy functions of the organization.

Question 9

possible assessment approaches to negotiate expected value (6)

Answer 9

• trade off analysis
• market - payoff variability
• budget variability
• performance variability
• market requirement variability
• time- to market variability

Question 10

Concepts that support the negotiation of expected value (3)

Answer 10

• value management framework
• evidence- based value statements
• efficient frontier

Question 11

tools for maximizing value (6)

Answer 11

• Risk appetite related to input & output quality assigned to components
• Design guidance applied to components (to prevent over- specification)
• Application of solution constraints to force synergy between components
• Requirement on individual components to exercise effective financial management
• Exercise of effective financial management on the portfolio level
• Use of the efficient frontier

Question 12

pillars of portfolio financial management (5)

Answer 12

• portfolio financial framework
• portfolio financial management plan
• portfolio components cost estimation
• portfolio budget
• financial management effort

Question 13

Purpose of value assurance

Answer 13

to ensure that the portfolio can realize the negotiated required value

Question 14

Intrests of the Portfolio Manager concerning assurance of value (4)

Answer 14

• requirements tracking
• acceptance criteria
• gated reviews
• quality assurance

Question 15

topics for reporting value (6)

Answer 15

• Risk reporting
• costs required to achieve required portfolio outcomes
• reasons for cost shifts
• cost synergies achieved between portfolio components
• achieved value
• reasons for any shift in value